Egyptian President Mohammed Morsi fired his intelligence chief and the governor of Northern Sinai on Wednesday following a weekend attack by suspected militants in Sinai who killed 16 soldiers.

In a major shakeup, Morsi also asked Defence Minister Hussein Tantawi to replace the commander of the military police, a force that has been heavily used since the ouster 18 months ago of Hosni Mubarak to deal with street protests. Rights activists have accused the military police of brutality against protesters.

Morsi also fired the commander of the presidential guards and ordered new chiefs for security in Cairo and the police's large central security, a large paramilitary force often deployed to deal with riots.

Wednesday's decisions were taken following a meeting of the National Defence Council which includes Morsi, top army commanders and senior intelligence officials. The decision-making at that meeting reflects a level of co-operation between the president, a longtime leader of the Muslim Brotherhood, and the powerful generals in the face of rising tensions.

Large swathes of northern Sinai have plunged into lawlessness following Mubarak's ouster, with a massive flow of arms smuggled from Libya finding their way into the hands of disgruntled Bedouins. The lawlessness is coupled with the rise in the area of al-Qaeda-inspired militant groups that are waging a campaign of violence against Egyptian security forces. They have also staged several cross-border attacks on Israel.

Earlier this week, militants stunned the Egyptian army with a bold, surprise attack in which gunmen killed 16 soldiers, stole armoured vehicles and drove into Israel to attempt another attack.

In a statement read out on state TV, the military said it has started a joint military-police ground operation in Sinai, backed by warplanes, to "restore stability and regain control." It provided little detail.

"The armed forces and the Interior Ministry, backed by warplanes, started on Tuesday night implementing a plan to restore stability and security control and to pursue and target the terrorist and armed elements in Sinai," it said, adding that initial operations had been successful and that the campaign was continuing.

"We call on the tribes and residents of Sinai to co-operate to regain security control" of Sinai, the statement said.

The Sunday ambush was one of the bloodiest attacks in Sinai in years and the deadliest against Egyptian troops, underlining the growing lawlessness of the territory, where security forces repeatedly have been targeted by militants, some loosely linked with al-Qaeda.

Attacks on three checkpoints

In the latest violence, gunmen opened fire late Tuesday night on three security checkpoints around el-Arish, the capital of North Sinai province, some 50 kilometres from the borders with Gaza and Israel. One of the attacks was on the checkpoint on the main highway between el-Arish and the town of Rafah on the Israeli border.

The shootings wounded six people, among them a military officer, two soldiers, two policemen and a civilian whose condition is critical, security officials told The Associated Press. The officials spoke on condition of anonymity because they were not authorized to talk to the press.

Israeli soldiers look towards Egypt at the Kerem Shalom border crossing, where gunmen on Sunday attacked with a seized Egyptian military vehicle. (Amir Cohen/Reuters)

Helicopters carried out strikes using missiles in retaliation later, security officials said. They did not give further detail.

Bedouin resident Abdel Rahman Abol Malkhous says he saw attack helicopters overhead firing missiles about 30 kilometres east of El-Arish in the area known as Sheikh Zuwayed near the Rafah border crossing with Gaza.

The security officials said it was the first time the army has fired missiles in Sinai since Egypt's 1973 war with Israel, in which Egypt tried to recapture the then-Israeli held peninsula. Sinai reverted to Egyptian control under Cairo's 1979 peace treaty with Israel. Israeli forces completed the withdrawal from the peninsula in 1982.

The military action is of "huge significance" to the region, according to Cairo-based freelance reporter Austin Mackell, in part because of the co-operation between Israel and Egypt.

"Israel seemed to welcome Egypt having a stronger military presence in the Sinai — which is an historic reversal," Mackell told CBC News Network.

The move also strengthens the Egyptian military's position against politicians in the Muslim Brotherhood who have talked about reducing the military presence on the peninsula, Mackell added.

Lawlessness and violence

In the Sunday attack, Egypt's military said 35 militants were involved, opening fire with assault rifles and rocket-propelled grenades on soldiers at a border checkpoint as they broke their daily fast for the holy month of Ramadan with a sunset meal.

Egyptian officials told the daily Al-Akhbar Wednesday the militants had nearly 400 kilograms of explosives in the vehicle. A major military funeral was held for the slain troops Tuesday in Cairo.

Sinai has seen lawlessness and militant violence in the past, but it took a turn to the worst after the uprising that toppled Hosni Mubarak in February 2011. Amid the uprising, police and internal security forces all but disappeared from the streets across the country. In Sinai, militants have grown steadily bolder and better armed as weapon smuggling from Libya picked up in the wake of the revolt there.

Residents say the militants are far better armed than the security forces on the ground, which have repeatedly come under attack by militants. Since Mubarak's ouster, some of the groups have distributed fliers in Sinai urging the forces to leave the peninsula because, they say, it will be declared an Islamic state.

Under the peace treaty with Israel, a large chunk of Sinai is to be demilitarized. But in 2005 and following Mubarak's ouster last year, Israel agreed to boost the number of troops in the area, although they remain lightly armed. The Sunday attack spurred renewed calls in Egypt to amend the 1979 treaty to allow for more troops and ammunition in Sinai.

With files from CBC News